The Future of the Strip?

For more than 50 years, retailers have favored the commercial strip: a linear pattern of retail businesses strung along major roadways characterized by massive parking lots, big signs, boxlike buildings, and a total dependence on automobiles for access and circulation.

For years, planners have tried to contain and improve the strip. Now they are getting help from consumers and the marketplace. The era of strip development is slowly coming to an end. Evolving consumer behavior, changing demographics, high-priced gasoline, internet shopping, and the urbanization of the suburbs are all pointing to a new paradigm for commercial development.

Commercial strips are not going to disappear overnight, but it is becoming increasingly clear that strip retail is retail for the last century. The future belongs to town centers, main streets, and mixed-use development. Here is why:

We’re overbuilt on the strip

From 1960 to 2000 there was an almost tenfold increase in U.S. retail space, from four to 38 square feet per person. For many years, retail space was growing five to six times faster than retail sales. Most of this space came in the form of discount superstores on the suburban strip.

The recession proved that we have too much retail. Strip centers are now littered with vacant stores. By some estimates, there is currently more than 1 billion square feet of vacant retail space, much of which has to be repurposed or demolished. One retail analyst estimates that we need to demolish 300 million square feet of retail space.

Urban Wal-Mart proposed for
Washington, D.C.

Retail is rediscovering the city

In 2010, Target announced plans to remodel the century-old Carson Pirie Scott department store in Chicago. This landmark building, designed by architect Louis Sullivan, will be just one of many new, so-called big-box retailers planned for urban neighborhoods.

Similarly, in late 2010 Wal-Mart announced plans for its first-ever stores in Washington, D.C. To make the four new stores fit into an urban environment, the company has agreed to consider an array of new layouts, designs, and parking arrangements.

The store planned for New Jersey Avenue illustrates Wal-Mart’s new approach. The company plans a store of 75,000 to 80,000 square feet (much smaller than usual) on the ground floor of a five-story mixed-use building featuring 315 apartments, underground parking, and space for small retail stores. Home Depot already has a new urban store in Toronto with housing on top.

At the same time that Wal-Mart, Target, Home Depot, and others are planning new urban stores all over America, as many as 400 former big-box stores sit vacant on commercial strips. Most analysts agree that urban neighborhoods are the new frontier for retail—the one place left with more spending power than stores to spend it in.

The suburbs are being urbanized

At the same time that retail is rediscovering the city, the suburbs are being redesigned. Chris Leinberger recently declared that “the largest redevelopment trend of the next generation will be the conversion of dead or dying strip commercial centers in the suburbs into walkable urban places.” (“Walkable Urbanism,” Urban Land, September 1, 2010). The conversion of car-dependent suburban development is already underway in many metropolitan areas like Washington and Los Angeles, and can be expected to increase in the years to come. Perhaps the nation’s most dramatic transformation has already occurred in Arlington County, Virginia, where Wilson Boulevard, once a miles-long, low-density strip lined with used-car lots and fast-food joints, has been transformed into a walkable urban place. According to Leinberger, “Arlington County now gets 60 percent of its tax revenue from 10 percent of its land mass.”

Traffic congestion, fuel prices, and auto-oriented design are problems for the strip

Americans value convenience, but the perceived convenience of the strip has been reduced as traffic congestion has worsened in recent years. Add to this rising fuel prices and an overall physical environment designed for cars, instead of people, and it’s understandable why fewer people want to shop the strip and almost no one wants to linger.

Suburban town centers and main streets provide a “place-making dividend” that the homogeneous blur of the strip can’t match. They also provide a “park once” environment that will grow in importance if fuel prices rise. Just imagine what will happen to strip development if gas prices hit $5 a gallon or more, as some analysts predict.

The old paradigm: single use,
auto-oriented.

Young consumers favor walkability and places with character

Walking for pleasure is, by far, America’s number-one form of outdoor recreation. If you combine walking with shopping—another one of America’s favorite pastimes—you have a winning combination. Time-constrained lifestyles and boredom with the dull sameness of most strip centers have meant a slow but steady decline in the number and length of stays at strip malls. People go to get what they want and they leave. A pleasant (i.e., “cool”) atmosphere is particularly important to the GenY generation. A mixed-use town center with street life, outdoor dining, and places to hang out, walk, and window-shop are much more likely to get the affection and the dollars of young shoppers than an auto-dependent strip.

The economy is restructuring the retail landscape

The recession saw the collapse of numerous big-box chains, like Circuit City and Linens ’n Things. This helped send vacancy rates soaring. After three years on the brink, consumer confidence has improved, but many analysts say we can expect a new “normal” when it comes to retail spending. Why? Because unemployment remains high, the days of unlimited credit are over, and retail analysts predict that a “new consumer frugality” will be the norm for years to come. What’s more, strip centers without anchors (like grocery stores) and Class B malls are virtually unfinanceable, according to many experts.

We’re also moving into an era of hybrid shopping centers. We used to have three standardized formats: the strip, the enclosed mall, and the power center. Now, all of these things are coming together in one place, in a hybrid format. According to commercial analysts, this means we are going to see a far greater mix of tenants than in the past. No longer will there be a Wal-Mart on one side of the street and a mall on the other. In the future, the Wal-Mart and the Costco will be in the same mall as Nordstrom and Macy’s. Also, many malls will more closely resemble old-fashioned main streets. Already, seven of the 13 regional malls in the Denver metropolitan area—like Belmar in Lakewood, Colorado—have been turned into mixed-use town centers.

The new paradigm: mixed use, accessible
by both cars and pedestrians.

E-Commerce means fewer and smaller stores

Today, the nation’s “healthiest” retailer is not Wal-Mart or Costco. It is Amazon. Amazon has exploited the increasing availability of broadband internet and mobile technology to build a retail superpower. One of the biggest reasons why the strip is coming to an end is because bricks-and-mortar stores are becoming a smaller part of the retail landscape.

First, it was catalog shopping; now it is e-commerce, social media, and mobile phones. This means that retailers will seek smaller footprints as merchandise categories move to online channels. For example, the rise of Netflix and streaming video means the end of bricks-and motor video stores. E-readers portend the end or at least the downsizing of bookstores; ditto for music stores, greeting card stores, and other merchandise categories.

None of this is meant to suggest that we won’t still have neighborhood centers with grocery stores, drugstores, and coffee shops, among other things. We will. But the endless expansion of the commercial strip—that homogeneous cluster of, sign clutter and asphalt that leads out from every town—is reaching the end of its useful life. A new paradigm is being shaped—not just by regulation, but also by consumers and the marketplace. Commercial strips (i.e., “road towns”) with no beginning and no end, with no center and no way to get around except by car, are becoming obsolete in an era of shrinking stores, rising gas prices, discerning consumers, walkable suburbs, and online shopping.

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